The amount of ether frozen in digital wallets is worth $162 million — which is less than initially feared

Around
$162 million in ether is frozen in Parity digital wallets after a
major hack. Some have compared the frozen ether to cash locked in
bank vault no key in sight.Eddie
Keogh/Reuters

Last week, a mistake by a novice hacker led to
customers of Parity being unable to access the ether they had
stored in their digital wallets.

Initially, some researchers estimated that as much as
$280 million worth of ether could be locked up.

Parity now say that the official amount that's frozen
is worth around $162 million.

The company is considering a technique that would
essentially unwind the Ethereum blockchain to unfreeze the
wallets.

A novice hacker's goof that last week locked some
consumers out of being able to access their stores of ether, a
cryptocurrency, wasn't as bad as initially feared.

Some 587 digital wallets have been frozen since November 6
when an unidentified user accidentally deleted the code library
required to use recently-created wallets within Parity
Technologies, a popular provider of them.

An official audit by Parity found exactly 513,774.16 ether was
frozen as a result of the deleted code, the company said Monday.
That amount of ether was worth around $162 million at press
time. Some 573 wallet holders were affected by the frozen
cryptocurrency.

That may not sound good, but researchers
initially estimated the problem was much worse,
potentially affecting as much as $280 million worth of
ether. Early on, though, Parity disputed those estimates.

"This is a learning opportunity (albeit a painful one) for our
company, for our collaborators and the community that stands with
us,"
the company said in a statement. It continued: "Moving
forward we will ... work together with the community to make core
infrastructure more secure."

Even though the problem wasn't as bad as feared, some companies
and individuals were hit hard. Cappasity, a startup, was
using its Parity wallet for fundraising when it was frozen.
The company has 3,264 ether — around $1 million worth —
locked up,
according to a blog post. Polkadot, a blockchain startup run
by Parity's founder Gavin Wood, was also affected by the
problem.

Parity and others have suggested 'hard fork' to undo
the hack.

Parity and the community around Ethereum, the blockchain
underlying ether, haven't agreed yet to a solution to the frozen
accounts. But they're contemplating a so-called hard fork in the
blockchain.

Blockchains are digital ledgers that record everything that has
ever happened involving them. Though the code required
to access the wallets was deleted, the wallets themselves
and the ether inside them still exist inside the Ethereum
blockchain. But without the code, they can't be accessed at this
point in the ledger's time line; some observers have compared the
situation to a locked safe without a key.

A hard fork would force the digital ledger to go back in time
to the moment before the critical code was deleted that led
to the frozen accounts. The fork would essentially create a new,
second path from that point, one in which the accounts were
never frozen. Such a move is the only way to unfreeze the
wallets, Martin Swende, head of security for the Ethereum
Foundation, told
the cryptocurrency blog EthNews.

Technically, hard forks aren't that difficult to do; to most
users they would look like a software upgrade. But they can
be controversial within blockchain communities. Some
enthusiasts fear that frequent forks will compromise
the integrity of and outside support for Ethereum
and potentially reduce ether's value.

The challenges of a hard fork "are more of a political than
technical nature," Swende told EthNews.

Parity is contemplating pushing for the hard fork to be included
in an upcoming security update dubbed EIP156 that
already enjoys widespread support.

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